Bad debts fall as net lending to businesses remains negative

By Staff Reporter

June 18, 2010 19:05 BST

The rate at which banks are writing off bad debts are falling according to the Bank of England, although demand for new loans remained slow.

The monthly 'trends in lending' report, showed that there appears to be a gradual easing of 'credit conditions' as net lending to businesses appeared to be recovering - albeit in a gradual reduction of negative lending.

Compared with March, net lending to businesses fell just £0.4 billion in April, much less than March's £3.9 billion decline.

IHS Global Insight Chief European Economist Howard Archer, however said that the survey did little to alleviate concerns that tight credit conditions were better off than before:

"This is even allowing for the fact that ongoing muted bank lending to companies is being influenced significantly by low demand for credit in addition to restricted supply," he said.

Net consumer lending meanwhile also fell by £0.1 billion.

Howard, who has worked for commented on April's mortgage lending figures earlier this month, said that housing prices were also a concern.